How to Responsibly Pay Off Your Credit Card

Credit card debt is a source of trouble and anxiety for
millions of Americans. Whether it’s a pesky balance that seems to never go
away, or overwhelming debt that has spun out of control, there are ways to reign
it in and look forward to a debt-free future.

Like many big changes, taking the right steps to getting control of your credit card debt can take some time to get accustomed to.

Paying off your debts won’t just come with employing one of the many tactics that can lead to debt relief. In order to get out of debt and stay out of debt, you may need to figure out how you got here, and how hard you’re willing to work to get out of it.

The first thing you’re going to want to try to do is take care of the lion’s share of your credit card debt as quickly as possible. The reason for this is quite simple: you have become a victim to your cards’ interest rates. If you continue to fail to pay off your debt, your debt will eventually balloon. The sooner you are no longer paying interest on your cards, the better. How do you release yourself from paying interest, you ask?

There are several different potential paths to walk down.

Repayment Tactics

There are two tried and true tactics for those who have credit card debt across multiple cards that allow you to avoid taking out a loan or opening up another card and transferring your debt to it. These tactics are aptly named the Snowball Method and the Avalanche Method.

Thanks to the names, they may not seem all that inviting,
but they can actually be a total life-saver if used in the right way.

The Snowball Method: Is quite simple, essentially, you start by making the minimum payments on all your debt, and focusing all of the rest of the available money you have to pay off your cards to the smallest debt. Once you pay that debt off in full, you move on to the second smallest debt, and so on until you are finally able to tackle the card with the largest amount of debt.

The reason this method of paying off debt is so popular is because it allows you to see results right away. It’s great if you’re experiencing some debt fatigue and need a morale boost to get even more motivated to pay off your debt.

The Avalanche Method: This tactic to paying off your debts differs from the snowball method, because instead of focusing on your lowest debt first, you’re actually focusing on your highest interest rate first. So say you have one card with 18 percent APR, another with 15 percent APR, and another with 13 percent APR. If you were to employ the debt avalanche method, you would begin with the 18 percent APR card and pay it off in full. Once that was taken care of, you would move to 15 percent, all the way down the line until you are debt free.

Balance Transfer Card

There are several prominent pathways to paying off credit card debt, and we’ll go over all of them right now. First, let’s consider saving money in the long run by getting yourself a balance transfer card.

Simply, a balance transfer card is a new credit card that
you get, and then transfer all of your existing credit card debt onto. It may
seem like nothing more than a surface change, but that couldn’t be further from
the truth.

For those with good to excellent credit, a balance transfer
card can be a real blessing. The reason why is because balance transfer cards
typically come with a promotional period (ranging from six to 18 months) of
zero percent interest rates on transferred money.

If you go this route, it is crucial to try to not put any
additional expenses on this card, that could defeat the purpose altogether, and
even worse, potentially end your promotional interest free period.

Taking Out a Secured Loan

This is typically for those who want to take out a loan to
pay off their debt, but do not enjoy the great credit score necessary to take
out a low-interest personal loan. The good news is that secured loan can be
used to pay off credit card debt in the same way as an unsecured personal loan.
The bad news is that you’ll have to put something, such as your home, car, or
other kind of valuable asset, up as collateral. That means, that if you fail to
repay your loan, or default on a payment, the lender could take the asset away
from you.

It’s a potentially high-risk, high-reward decision to make, and it is probably wise to consult a financial advisor regarding your specific case before you elect to take out a secured loan.

Taking Out a Personal Loan

This is another tactic that many employ to get out of credit
card debt. Again, it may seem like you’re just moving money around without
actually putting yourself in a better financial situation, but again that is
not true. The benefit of taking out a personal loan lie in the reduced interest
rates. For people with great credit, interest rates on a personal loan can be
as low as six percent. Compared to the cards that got you into credit card
debt, a six percent interest rate is very low.

Lifestyle Changes

The great thing about making lifestyle changes to help take
control of your credit card debt is that you can do it no matter where you are
along your journey to a debt-free life. Making lifestyle changes can include
everything from spending money groceries and not going out to eat, to trading
in for a cheaper car, to inviting a roommate to come live in your guest
bedroom.

Sure, all big-budget lifestyle changes will certainly have an impact on your, well, lifestyle, but in the end, it was your lifestyle that likely got you into credit card debt to begin with. Spend less and save more.

Budget for big expenses as opposed to just putting them on your card, and commit some of your “free” time towards making money. None of it is fun, and all of it is a sacrifice, but it will definitely be well worth it when you look at your credit card statements and realize that you are a much more financially free person than you were back when you were struggling with a mountain of debt.